Swedbank Ab Class A · OMXSTO:SWED_A
Swedbank Ab Class A — Q1 2020 Earnings Presentation
33 slides from Swedbank Ab Class A's earnings presentation, 2020
Slide 1: Swedbank's first quarter results 2020
Swedbank’s first quarter results 2020 Jens Henriksson (CEO), Anders Karlsson (CFO) Lars-Erik Danielsson (CCO) © Swedbank Information class Public
Slide 2: "The Great Lockdown"
“The Great Lockdown” 2019 2020F 2021F IMF* Global 2.9 % - 3.0 % 5.8 % Sweden 1.2% -6.8% 5.2% Swedbank** Sweden 1.2 % - 4.2 % 3.9 % Estonia 4.4 % - 5.0 % 5.0 % Latvia 2.2 % - 5.8 % 5.8 % Lithuania 3.9 % - 5.0 % 5.0 % * IMF World Economic Outlook, April 2020 https://www.imf.org/en/Publications/WEO/Iss
Slide 3: Swedbank's response to the Corona crisis
Swedbank’s response to the Corona crisis Fast adjustment to extreme conditions – More than 7 000 employees work remotely – Branches in all Baltic regions open – 159 out of 161 Swedish branches open – 16 000 applications for amortization easing granted © Swedbank Information class 3 Public
Slide 4: Moving on
Moving on © Swedbank Information class 4 Public
Slide 5: AML initiatives - areas and total numbers
AML initiatives - areas and total numbers 3 (3) FIU Reporting Risk Assessment 16 (11) 56 (39) Monitoring Internal Regulations 61 (43) 217(152) 12 (8) Risk Classification Training 2 (2) 67 (46) Customer Due Diligence © Swedbank Information class Public
Slide 6: AML initiatives – work in progress
AML initiatives – work in progress Total Not yet Total Ongoing Ongoing Ongoing Completed started initiatives 87 56 7 19 48 217 Change +20 +6 -1 +8 +31 +65 from Q4 © Swedbank Information class 6 Public
Slide 7: Timeline
Timeline Feb Mar Apr Maj Jul Sep Nov Jan Apr Jul Oct Jan 2019 2020 2021 2022 Cultural review Validation of AML control quality Compliance assessment Corporate Governance Strengthening Estonian FSA Precept US authorities © Swedbank Information class 7 Public
Slide 8: Q1 2020 – solid underlying business, during an unprecedented quarter
Q1 2020 – solid underlying business, during an unprecedented quarter with Covid19 and fines • Income SEK 10.2bn • Costs excl. fine SEK 5.4bn • Credit impairment provisions SEK 2.2bn • Profit excluding fine SEK 2.3bn • Fine from the Swedish FSA SEK 4.0bn • Net profit SEK -1.7bn • ROE excl. fine 6.5 p
Slide 9: Looking ahead
Looking ahead • Macroeconomic uncertainty • New guidance for FY2020 total expenses of SEK 21.5bn • Cost focus • Challenging environment for our customers • A time to return trust © Swedbank Information class 9 Public
Slide 10: A quarter with unprecedented challenges
Group result A quarter with unprecedented challenges SEKm Q1 20 Q4 19 ▲QoQ • Strong net interest income Net interest income 6 686 6 408 278 • All other income lines negatively Net commission income 3 223 3 415 -192 impacted by Covid-19 Net gains and losses -322 1 218 -1 540 Other income 645 915 -270
Slide 11: Significant lending and deposit volume flows
Significant lending and deposit volume flows Loans Deposits +26bn +55bn** of which +5bn of which +12bn of which +11bn +25bn +30bn Swedish Baltic Banking Corporate excl. Private Corporate mortgage loans Baltic Banking Of which FX +10 Of which FX +3 Of which FX +13 **excl. Group functions and other (G
Slide 12: Stronger net interest income
Group result Stronger net interest income NII, SEKm • Lower average loan volumes 11 169 6 686 • Higher deposit margins 102 6 408 37 -7 -35 • Lower mortgage loan margins • Lower resolution fund fee • One day less in the quarter • Group Treasury impacted by internal Q4 2019 Loan Margins Resolution FX
Slide 13: Lower net commission income
Group result Lower net commission income NCI, SEKm • Covid-19 crisis impacts most areas negatively 3 415 34 3 223 • Lower income in cards from reduced -148 -78 transaction volumes and seasonality • Asset management income affected by negative market development and net outflows Q4 2019 Cards & Asset
Slide 14: Significant negative valuation effects
Group result Significant negative valuation effects NGL, SEKm • Negative valuation effects in derivatives 1 186 1218 and bond inventories 768 • Negative valuation effect from shares in 457 Visa and Asiakastieto • Solid underlying client trading activity in equities, FX and fixed income Q1 2019 Q2 20
Slide 15: Lower other income
Group result Lower other income Other Income, SEKm • Lower income from insurance due to higher claims 839 919 915 • Lower income from savings banks due 685 645 to credit impairments and valuation effects on bonds • Entercard Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 – Sale of credit portfolio in Q4 (1
Slide 16: Low risk loan portfolio with high quality collateral
Low risk loan portfolio with high quality collateral Total loans categorised by Covid-19 sensitivity, SEK 1 632bn 1 800 1 600 ▪ Considerably impacted sectors, SEK 125bn (8%) • Long period of low risk appetite – Manufacturing 1 400 − − Retail Transportation safeguard the portfolio: − Shipping and Off
Slide 17: Credit impairment provisions in Q1 2020
Credit impairment provisions in Q1 2020 Around SEK 2.2bn Macroeconomic 648 adjustments Expert portfolio 698 adjustments Individual 889 assessments © Swedbank Information class 17 Public
Slide 18: Macroeconomic adjustments
Macroeconomic adjustments Sweden: Real growth scenarios Sweden: Unemployment scenarios Oil price scenario (Brent ave $/b) 6% 16 70 4% 14 60 2% 50 0% 12 40 -2% 10 30 -4% 8 -6% 20 6 10 -8% -10% 4 0 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 Positive Base Negat
Slide 19: Expert portfolio adjustments
Expert portfolio adjustments SEK 698 Sectors mostly impacted 83 305 • Manufacturing, SEK 200m • Retail, SEK 90m • Hotels & Restaurants, SEK 34m 310 • Shipping & Offshore, SEK 90m Expert portfolio adjustments • SEK 83m PD migrations of borrowers in stage 1 • SEK 305m PD migrations of borrowers in sta
Slide 20: Individual assessments
Individual assessments Total Decrease 18.4 • Oil-related portfolio loans carrying amount SEK 13.8bn 13.8 -4.6 Oil-related Provisions Loans carrying amount © Swedbank Information class 20 Public
Slide 21: Distribution of loans by stages
Distribution of loans by stages Total loans gross by stages, SEKbn Credit impairment provisions, total, SEKm (Loans to the public) (Loans to the public incl. off-balance) 1 618 1 619 1 612 1 640 6 680 6 876 7 262 9 615* 100% 100% 12 13 14 13 98% 80% 96% 106 107 106 4 443 6323 124 4 716 5179 60% 94%
Slide 22: Solid capital position
Capital Solid capital position CET1 capital ratio, % • CET1 capital increased by SEK 1.4bn – Negative effect from net profit loss 17.0% 16.1% 16.3% 16.1% of SEK 1.4bn excl. dividend 13.1% – Positive IAS19 pension valuation effect of SEK 3.5bn • REA increased by SEK 41.9bn Q2 2019 Q3 2019 Q4 2019 Q1
Slide 23: Increased Risk Exposure Amount (REA)
Capital Increased Risk Exposure Amount (REA) REA, SEKbn • REA increased by SEK 41.9bn 15.2 691.1 – Lending volumes increased REA 4.5 2.9 5.5 13.7 – Market movements increased REA for 649.2 market risk and derivatives – Annual calculation of REA for operational risk – Weaker SEK increased REA – Adjus
Slide 24: Swedbank – strong financial starting position
Swedbank – strong financial starting position Balance sheet Earnings capacity (profit before impairments, SEKbn) • Liquidity coverage ratio, 162% 30 20 • Net stable funding ratio, 116% 10 • Liquidity reserve, SEK 484bn 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 – Of which SEK 295bn (61%) pl
Slide 25: Forward looking comments
Forward looking comments INCOME ASSET QUALITY ▪ Lending volumes and margins ▪ Individual assessments ▪ Cards and asset management ▪ Uncertainty remains ▪ NII sensitivity EXPENSES CAPITAL ▪ PD migrations to impact REA ▪ Updated cost guidance ▪ Dividend outlook © Swedbank Information class 25 Public
Slide 26: Higher expenses in 2020 due to AML-related initiatives
Higher expenses in 2020 due to AML-related initiatives FY 2020 total expenses estimate of around SEK 21.5bn • Revision due to finalised investigations 21.50 Covid-19 related expenses 0.25 • AML investigation cost is 20.00 expected to increase by around AML investigation 1.55 SEK 750m AML investigati
Slide 27: Appendix
Appendix © Swedbank Information class Public
Slide 28: IFRS9 scenarios - Q1 2020
IFRS9 scenarios1 - Q1 2020 Sweden POSITIVE (16%) BASE NEGATIVE (16%) GDP Houseprices Unemployment GDP Houseprices Unemployment GDP Houseprices Unemployment Ann growth End-year Ann Average Ann growth End-year Ann Average Ann growth End-year Ann Average 2019 1.3% 5.4% 6.8 1.3% 5.4% 6.8 1.3% 5.4% 6.8 2
Slide 29: Strong asset quality in core segments
Group Strong asset quality in core segments Credit impairments, SEKm Q1 20 Q4 19 ▲QoQ Swedish Banking 373 10 363 Baltic Banking 146 -3 149 Large Corporates & Institutions 1 627 982 645 Swedbank Group 2 151 988 1 163 Ratios Q1 20 Q4 19 Credit impairment ratio, % 0.51 0.23 Share of Stage 3 loans, gros
Slide 30: Sustainability in our DNA – Q1 accomplishments
Sustainability in our DNA – Q1 accomplishments Enabling customers to make smart and sustainable choices Swedbank recent commitments and recognitions Private and corporate customers can apply for loan repayment relief if their financial situation has been Swedbank certified as a ‘Nasdaq ESG Transpare
Slide 31: Two hundred years of sustainability
Two hundred years of sustainability Key achievements 2019 65% 51 3 800 14bn SEK 100% …decrease of Swedbank's …Swedbank’s green bonds …Swedbank’s Youth Financial …Swedbank’s Green Asset Pool …Assets under management direct carbon footprint 2019 printing in 2019 Literacy sessions in 2019 – 15% financi
Slide 32: Strong liquidity position
Strong liquidity position Liquidity and funding Survival horizon Stable liquidity key ratios SEKbn more than 12 months Net Stable Funding Ratio and Liquidity coverage ratio, % 800 125 190 • Solid liquidity buffer – prefunded for 700 NSFR, CRD2 (LHS) LCR (RHS) 600 120 180 more than 12 months (surviva
Slide 33: Real-estate price performance – Sweden
Swedish Real-estate price performance – Sweden, housing and mortgage 12 month market Single-family homes1 Tenant-owner rights2 Combined3 12M Δ 12M Δ 12M Δ Apr 19 2% 0% 1% May 19 2% 1% 2% Jun 19 2% 2% 2% Jul 19 3% 2% 2% House price index, Sweden 2005=100 Aug 19 2% 1% 2% 350 Total Sep 19 3% 2% 3% 300